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Sagarmala-National Perspective Plan Cover Executive summary i Executive summary Potential for coastline The high variability of transit time impacts development in India the trade since exporters are not able to commit to tight delivery schedules and India is richly endowed with natural have to finance higher working capital. maritime advantages, with a 7,500-km coastline covering 13 states and union Adequate road and rail connectivity territories, a strategic location on key linkages to ports have not been developed international trade routes and 14,500 km of in tandem with port development, resulting navigable and potentially navigable in instances of new ports with modern waterways. Maritime logistics has been an facilities being underutilised due to important component of the Indian connectivity bottlenecks. For example, one economy, accounting for 90 per cent of of the factors impeding the utilisation of EXIM trade by volume and 72 per cent by non-major ports of southern Maharashtra is value. More than 1 bn tonnes of cargo was poor connectivity between industrial handled across over 200 ports in FY 2015. centres and ports. Inadequate road and rail linkages through the Western Ghats A robust maritime logistics sector with constrain North Karnataka’s development. modern and efficient port infrastructure can Inadequate focus on developing coastal be a strong catalyst of economic growth. shipping and inland waterways for EXIM trade can become competitive domestic (non-EXIM) logistics has skewed through cost-efficient and timely logistics. the modal mix of transport in India with a Coastal and inland waterway transportation disproportionately high share of roadways. is energy efficient, eco-friendly and reduces logistics costs for domestic freight. The siting and master planning of industrial However, the Indian coastline and river clusters and zones (often with high EXIM network has historically remained under- traffic) does not adequately take into leveraged. Despite significantly lower account proximity to ports. The port land costs, water transport accounts for only 6 itself is inadequately utilised for setting up per cent of total freight movement in India industries and manufacturing. Major ports in tonne km terms. Industrial development have 2.71 lakh acre of land, of which 2.35 has not fully utilised the structural lakh acre is underutilised. Raw material advantages of efficient supply chains often travels a large distance from coastal leveraging proximity to coast. areas to the hinterland and then finished products travel back from the hinterland to Logistics costs account for a large part of the coast for exports. This reduces the the Indian non services GDP compared to competitiveness of Indian exports developed nations. EXIM containers in compared to other exporting countries. India travel a distance of 700 to 1,000 km between production centres and ports, Internationally, several ports have been compared to 150 to 300 km in China. Lack successful in generating higher value-add of seamless connectivity across various and jobs inside the port area compared to logistics modes and complexity in the metropolitan area (Exhibit 1). Existing procedures contribute to high variability in policies in India for usage of port land are transit times. As a result, container exports focused on maximising rental yields, rather take 7 to 17 days from the hinterland to than the maximisation of overall economic vessel, compared to 6 days in China. value-add and job creation. Sagarmala (Ministry of Shipping) ii Executive summary EXHIBIT 1 Value-addition and job density inside the port area Port and metropolitan value added per sq km Job density 2009, EUR mn 2009, Number of jobs Port value added per sq km Job density inside port area Metropolitan value added per sq km Average job density metropolitan area 200 1,800 1,600 150 1,400 1,200 1,000 100 800 600 50 400 200 0 0 Rotterdam Hamburg Antwerp Rotterdam Hamburg Antwerp SOURCE: ―The Competitiveness of Global Port-Cities‖ by OECD Indian ports are often small, inefficient and addition, some ports like JNPT are lack the draft to accept larger sized congested while others do not have vessels. As a result, no Indian port ranks sufficient cargo. among the global top 20 (Exhibit 2). In EXHIBIT 2 Comparison of India, China, US on a few port-related KPIs India China US Port capacity stock 1 3 10 (% of GDP) Number of shipyards2 7 70 45 Number of ports in global 0 9 2 top 20 Container traffic 11 185 44 (mn TEU) Average annual growth 0.5 10 0.4 in container traffic1 (mn TEU) Contribution of waterways in ~6% 24% 6% domestic transportation3 Average turn-around time 4.5 1 1.2 (Days) 1 Over 2008–2012 2 That can make more than 120 mts long ships 3 Includes both Coastal Shipping and Inland Waterways SOURCE: Expert discussion; World Bank; Lloyd’s list; OECD; Port technology; Clarksons Sagarmala (Ministry of Shipping) Executive summary iii Port-led development adequate linkages to ports are important opportunity for India factors industry to be competitive. The opportunity from pursuing port-led Industrialisation positively impacts per development is immense in India, as capita income and hence the prosperity of evident from a comparative analysis with the region. However, for industrialisation to China (Exhibit 3). China leads India by a be competitive, it needs to have effective factor of seven times to 16 times on the and efficient logistics. Proximity and/or measured parameters. EXHIBIT 3 Comparative impact of port-led development on economies of India and China India China China/India Land mass (mn sq km) 3.3 9.6 3X Size GDP (USD trillion) 1.9 9.2 5X Cost of energy 19 11 -42% (cents/kWh) Electricity production 1,000 5,000 Energy 5X (bn kWh) Petchem crackers 07 46 7X (number) Port-led Steel production 87 823 10X develop- (mn tonne) ment Materials Cement production 280 2,480 9X (mn tonne) Container traffic 11 174 16X Discrete (mn TEUs) Mfg Merchandise export 317 2,343 7X (USD bn) Mobile subscribers 1,000 1,290 1X (mn) Services Internet subscribers 354 659 2X (mn) The Sagarmala initiative was conceived by harnessing the potential of India’s coastline the Government of India to address the and river network. Sagarmala was challenges and capture the opportunity of articulated by the then Prime Minister Shri port-led development comprehensively and Atal Bihari Vajpayee in 2003 and holistically. Sagarmala is a national announced by the Prime Minister Shri programme aimed at accelerating Narendra Modi in 2014. It was approved by economic development in the country by the Union Cabinet in March 2015. Sagarmala (Ministry of Shipping) iv E x e c u tive summary Sagarmala vision Based on these studies, Sagarmala can aspire to reduce logistics costs for EXIM ―The vision of Sagarmala is to reduce and domestic cargo leading to overall cost logistics cost for both domestic and EXIM savings of INR 35,000 to 40,000 cr. Some cargo with minimal infrastructure of this will be direct cost savings, while investment.‖ Studies under Sagarmala others are savings from inventory-handling have identified opportunities for reducing costs resulting from time (and reduced overall logistics costs, thereby improving variability) in transportation of goods, the overall efficiency of the economy and particularly containers. These cost savings increasing competitiveness of exports. apply to current industrial capacities as well A multi-modal logistics optimisation model as future coast proximate capacities for has been developed to identify the most energy, material, marine and discrete optimal mode of evacuation to/from ports industries that could come up through port- for both EXIM and domestic cargo. The linked industrialisation. Four main model suggests substantial opportunities strategies have been identified for for logistics optimisation. achieving the overall vision of logistics cost-reduction (Exhibit 4), and their impact is depicted in Exhibit 5. EXHIBIT 4 Sagarmala vision Reducing the cost of Lowering logistics cost of transporting domestic cargo bulk commodities by locating through optimising modal Reduction of future industrial capacities mix logistics cost near the coast for EXIM and domestic trade with minimal Improving export infrastructure competitiveness by Optimising time/cost of EXIM investment developing port proximate container movement discrete manufacturing clusters Sagarmala (Ministry of Shipping) Executive summary v EXHIBIT 5 Impact from Sagarmala – 2025 Share of waterways – inland INR 4 lakh Infrastructure investment Double and coastal – in modal mix cr mobilisation from 6% INR 35,000– Logistics cost saving per USD 110 bn Boost to exports 40,000 cr1 annum New direct jobs, and 60 lakh 40 lakh indirect jobs 1 Savings from coastal shipping of coal – 17,000 to 18,000 Cr Savings from coastal shipping of steel, cement, food grains and fertilisers - 11,500 to 13,500 Cr Savings from modal shift and time and variability reduction of containers - 7,000 to 9,000 Cr 1. Reducing the cost of transporting from Mahanadi Coalfields by railways, but domestic cargo through optimising could save significantly by taking coal on modal mix1 the rail-sea-rail (RSR) route. It is estimated that 100 to 130 mn tonnes of coal could The cost per tonne kilometre of moving move through the RSR route to these cargo by sea or inland waterway routes can plants by 2020, resulting in annual savings be 60 to 80 per cent lower than by road or of over INR 10,000 cr to the power sector. rail. However the modal share of coastal In addition, up to 50 mn tonnes could be shipping and inland waterways remains moved coastally for non-power thermal low. Several production and demand coal users (for example, cement, steel, centres in India lie close to the coastline aluminium plants). This increases further in and rivers, yet the waterways are 2025 (Exhibit 6).
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